Renmin University Sees Chinese GDP Growth of 6.7% for 2017

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A new research report from one of China’s leading institutions forecasts 6.7% GDP growth this year.

The research report released by China’s Renmin University concludes that China’s economy is already rebounding after bottoming out, and that risk and pressure have already relented following effective supply side reforms.

“In the first half to the year China’s macroeconomic performance continued the stable and positive trend since the second half of 2016, and multiple macroeconomics indicators tended towards improvement,” said Liu Fengliang, a researcher at Renmin University’s National Academy of Development and Strategy. “Nominal GDP growth has rise for 5 successive quarters, and the micro-foundations for economic performance have further strengthened.

“The economic structure continues to optimise, and the economy has in general achieved a strong opening.”

According to the report China’s economy is showing diversified performance across a broader scope and greater range of levels, with upstream industries, the export sector and state-owned enterprises continuing to perform well, while medium and downstream sectors and the private economy face sluggish aggregate demand and poor investment opportunities.

The report said that it will still be some time before a rise in China’s aggregate demand triggers a new cycle of capacity expansion.

Given current the tone of current macroeconomic policy adjustments, it sees infrastructure investment and property investment growth easing in H2 2017, and little sign of a rebound in private investment.

Downward pressure on nationwide fixed capital investment will become more pronounced, while an ongoing slowdown in Chinese incomes will restrain consumption growth.

The Chinese economy will nonetheless receive strong support in the short-term from international economic cycles, with the second bottom in an “asymmetric W adjustment” having already arrived at the end of last year to he start of this year,and stabilisation in fluctuations.

Should the fiscal deficit remain at 3 of GDP% and exchange rate growth at 7%, the Renmin University report sees full year GDP growth in China of 6.7% on the back of a recovery in the global economy and a boost from domestic policies.

The report notes that for the first half of 2017 China’s GDP was 18.0683 trillion yuan for real growth of 6.9%, and a gain of 0.2 percentage points compared to the same period last year as well as the full year average.

The GDP price deflator have also risen considerably, pushing up nominal GDP growth from 8% at the end of last year to 11.8%.

“Based on the prior economic cycle, the price deflator has risen and nominal GDP continues to be higher than real GDP growth, which is a strong sign of stabilisation of the macroeconomy, said Liu Fengliang.

According to the report China’s economy is showing diversified performance across a broader scope and greater range of levels, with upstream industries, the export sector and state-owned enterprises continuing to perform well, while medium and downstream sectors and the private economy face sluggish aggregate demand and poor investment opportunities.

The report said that it will still be some time before a rise in China’s aggregate demand triggers a new cycle of capacity expansion.

Given current the tone of current macroeconomic policy adjustments, it sees infrastructure investment and property investment growth easing in H2 2017, and little sign of a rebound in private investment.

Downward pressure on nationwide fixed capital investment will become more pronounced, while an ongoing slowdown in Chinese incomes will restrain consumption growth.

The Chinese economy will nonetheless receive strong support in the short-term from international economic cycles, with the second bottom in an “asymmetric W adjustment” having already arrived at the end of last year to he start of this year,and stabilisation in fluctuations.

 

 

 

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